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Integration of Activity Tracker and Smart Watch Apps

ABI Research reports that activity trackers dominated sales of smart wearable devices in Q1 2014, outselling much-hyped smart watches by 4 to 1 -- with 2.35 million devices shipped during the period.

Fitbit remains the market leader, with a majority share, but will face growing competition in Q2 2014 and over the course of the year, especially with Samsung about to launch the hybrid Samsung Gear Fit.

"Activity Trackers are currently the most viable consumer electronics wearable device category, because they have a clear use case that cannot be matched by smartphones, in contrast to smart watches," said Nick Spencer, senior practice director at ABI Research.

People have been happy to ditch their watches and use smartphones to tell the time, so extending smartphone functions to the watch is a weak use case and retrograde step.

Smart watch sales dropped significantly in Q1 2014 compared to Q4 2013, due in small part to the seasonal effect of Christmas, but largely due to the imminent launch of Samsung’s Gear smart watches and Gear Fit activity tracker.

The Samsung Gear dominated sales in Q4 2013 -- mainly through bundles with the Samsung Galaxy Note III -- but retailers and distributors were looking to clear their Samsung Gear 1 channel inventory in anticipation of the upgrade in Q2 2014.

"We shouldn't dismiss smart watches, which are an evolving and, if you believe in reincarnation, a nascent category," adds Spencer.

Smart watches will develop rapidly in 2014 and 2015, with integrated hybrid "activity tracker/smart watch" devices soon to hit the market, more specialized components being developed and most importantly the use case improving through a growing applications ecosystem.

As the value proposition of smart watches increases, however, the price will still need to decrease to balance with end-user expectations.

ABI Research expects 10 million activity trackers to be shipped in 2014 and 7 million smart watches.

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